Tourism minister's criteria for equity fund 'illegal', says SCA

By Kailene Pillay Time of article published Sep 22, 2021

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THE Supreme Court of Appeal (SCA) today granted leave to appeal to AfriForum and Solidarity Trade Union who argued that the minister of tourism was not legally entitled to use B-BBEE criteria as the main requirement to access emergency funds in the tourism sector.

AfriForum approached the SCA to review the decision by the Department of Tourism to make relief funding available, subject to B-BBEE criteria, and to have it set aside.

It submitted that the restrictions imposed by the government in an effort to curb the spread of the coronavirus had had a devastating financial effect on the sector as a whole.

The national government established a Tourism Relief Fund of R200 million, and the minister issued a directive in order to provide one-off grant assistance for small businesses in the tourism industry to mitigate the impact of Covid-19.

In the directive, the minister included as a criterion for eligibility for funding the broad-based black economic empowerment (B-BBEE) status levels of applicants.

The central issue in the appeals was whether she was entitled to do so.

The minister argued that she had no choice but to do so and she was legally obliged by the B-BBEE Act.

The SCA found, however, that the minister’s empowerment to make the directive was sourced in the Disaster Management regulations and not the B-BBEE Act. The result was that the grants were not grants in support of B-BBEE.

The SCA found that the minister had misinterpreted the B-BBEE Act and had been led by that misinterpretation to believe that she was legally obliged to include the status levels of an applicant for funds as a criterion for eligibility.

“She had thereby committed a material error of law,” the judgment read.

The judgment further read that, as the R200m in the fund had been disbursed, little purpose would have been served in reviewing and setting aside the minister’s direction.

Instead, following the setting aside of the court orders, the SCA issued a declaratory order to the effect that the minister was not legally obliged by the B-BBEE Act to make eligibility for assistance from the fund subject to the Tourism Sector Code and that her direction was unlawful.

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Political Bureau

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